An economist estimates that with every 20 percent increase in income, the quantity of grapes purchased rises by 11.2 percent. From this information one would conclude that grapes are:
A. a normal good.
B. not demanded.
C. a luxury.
D. an inferior good.
Answer: A
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Assume the Fed wants to lower the interest rate. How does the Fed lower the interest rate in the short run?
What will be an ideal response?
If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as
A) a pie chart. B) a demand curve for outsourcing. C) a time-series graph. D) a supply curve of outsourcing.
A decrease in the price of a good enhances the consumer's purchasing power. The income effect applies to both normal and inferior goods by encouraging the consumer to purchase more
a. True b. False
Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $10 . Athos values a fencing lesson at $15, Porthos at $13, and Aramis at $11 . Suppose that if the government taxes fencing lessons at 50 cents each, the price rises to $10.50 . A consequence of the tax is that consumer surplus shrinks by
a. $1.50 and tax revenues increase by $1.50, so there is no deadweight loss. b. $9.00 and tax revenues increase by $1.50, so there is a deadweight loss of $7.50. c. $7.50 and tax revenues increase by $7.50, so there is no deadweight loss. d. $7.50 and tax revenues increase by $1.50, so there is a deadweight loss of $6.